It almost “goes without saying” that a Democratic victory in the upcoming US presidential election would be “seen as a positive” for clean technology, according to global asset management firm Franklin Templeton. Conversely, a second Trump administration – especially if backed by a Republican-controlled Congress – could lead to legislative changes that would significantly hinder clean energy initiatives, much of which would centre on implications for the Inflation Reduction Act (IRA). In a paper assessing the potential impact of the election on the US energy transition, the asset manager assessed which sections of the IRA that would be at risk under a Republican administration. Although wind, solar and electric vehicles (EV) are at moderate risk, other “more speculative areas” – such as hydrogen and carbon capture – would be more vulnerable, Franklin Templeton argued. “We expect energy companies to keep pushing for less aggressive subsidies in this area, and we view this as a low-jobs, high-subsidy part of the IRA that remains at risk,” the paper read. “From an investment standpoint, we do not see this industry as likely to achieve profitable growth. Thus, we expect to continue to avoid investing in hydrogen companies until we see more evidence of sustainable profitability.” While Democrats are generally expected to continue their support for decarbonisation through limits on new oil and gas expansions, incentives for consumers to switch to EVs, and measures under the IRA, Republican candidate Donald Trump has suggested he would strive to reverse these effort and likely support oil and gas at the expense of cleaner sources of generation. “On balance, a Republican victory in the US election would not be supportive for global action on climate change but may have less direct impact on key areas that are already cost-competitive, such as solar or wind,” said Craig Cameron, Portfolio Manager of the Templeton Global Equity Group. “We expect renewable energy and EVs would continue to grow under a Trump presidency, but at a slower rate than under a Democratic president. In many cases, state-level mandates, corporate commitments and economics are the primary driving factors behind the energy transition, rather than solely federal policy.”
